Nearly half (41%) of small business owners are still unaware of Making Tax Digital, according to research from Intuit QuickBooks, with the online software specialist saying accountants will play a key educational role as the deadline for the switch to digital updates nears
From April 2019, VAT registered businesses with above £85,000 turnover will be required to maintain a digital record of their VAT transactions and submit their VAT returns using Making Tax Digital-compliant software.
Intuit’s research showed that as well as a lack of familiarity with the concept, 22% of those polled said they were only planning to file taxes digitally if they were to incur financial penalties.
Its survey found three quarters of business respondents (76%) cited understanding the legislation as a challenge, followed closely by finding new tools to help them comply (70%), finding time (66%), and managing additional work (64%).
Nearly half (42%), however, do turn to their accountant for information on taxes and managing business finances. Of those who do use an accountant, the majority (80%) rely on them for tax calculation, suggesting accountants could play a key role in alleviating concern, confusion or misinformation about Making Tax Digital amongst small business owners.
Accountants polled cited client education as their top concern in the lead up to Making Tax Digital (29%), ahead of adapting their own practice to comply (27%), and training clients on online software (27%).
Nick Williams, head of business development, accountants, Intuit QuickBooks, said: ‘Embracing the forthcoming legislation as an opportunity to educate and empower clients is an excellent way for accountants to reinforce their value. Change is never easy, but the time to initiate these conversations is now.’
The research suggested accountants saw benefits in Making Tax Digital, including less stress on year-end tax (64%), with opportunities to grow their practice (62%), streamline processes (61%) and allow for a more consultative approach to servicing clients (59%).
However, while nearly half (44%) felt they know a lot or everything about Making Tax Digital, just under a third (30%) felt they know little or nothing.
The results are from a survey of 234 small business owners and 180 accountants in the UK.
Report by Pat Sweet
